Dividends
In light of this strong performance, the board is recommending an increased
final dividend of 6.6p per share (2001: 6.05p), bringing the total dividend
for the year to 9.9p (2001: 9.2p), an increase of 7.6%. This increase
is in line with our policy of reinvesting our strong cash flow in the
continued growth of the Group, whilst at the same time maintaining a healthy
dividend cover and seeking to reward shareholders with above inflation
increases. We have achieved this aim for each year since flotation in
1994, returning compound annual dividend growth of 9.5%.
Board
After 12 years with the Group, including three and a half years as finance
director, Justin Atkinson (42) has been appointed chief operating officer
with immediate effect. A search for a new finance director is already
underway. Building on the management changes announced at the half year,
Bob Rubright (51) and Rob Ewen (43), managing directors of Foundation
Services and Specialist Services respectively, join the board with effect
from today. The promotion of these three extremely capable individuals
combines continuity with a fresh perspective and reinforces our management
structure.
In January 2003, we welcomed Pedro Lopez Jimenez to the board as a non-executive
director. Amongst his external appointments, Mr Lopez Jimenez is chairman
of Terratest Tecnicas Especiales, S.A., a shareholder in Keller-Terra.
With first-hand knowledge of the construction sectors in Europe and South
America, his appointment brings valuable insight and extensive international
experience to the board.
People
In the last two years, we have increased Group turnover from £313m
to £511m, much of which has come from organic growth. This has presented
a considerable challenge to our management and staff. Delivering this
growth in turnover, whilst increasing margins and maintaining a healthy
cash flow, is a tribute to the skill and dedication of our employees.
I would like to extend the board’s sincere thanks for their hard
work in 2002, which has been at the heart of our success.
Strategy
Our performance in 2002 continues our impressive track record, reflecting
the consistency of our strategy to further consolidate our global leadership
in Foundation Services and to strengthen and broaden our offering of technical
services and products to the construction industry. In 2003, we will continue
to invest wisely in our existing businesses to exploit fully the opportunities
to grow their market share and extend their geographic presence. We will
also continue to take advantage of selective acquisition opportunities
where they arise and where they offer long term growth and value enhancement.
Outlook
In closing, I am pleased to be able to report that we go into 2003 with
a total order book representing four months’
sales, which gives a strong platform for the year ahead.
We see potential for continued growth in Europe, given
our broad product range, leading market positions and sector mix. In the
US, although weather has delayed some job starts, we continue to see strength
in the infrastructure and housing sectors. Against this background, and
with the benefit of a full year’s contribution from McKinney and
Keller-Terra, the present indications encourage us to believe that 2003
will be another good year for the Keller Group.
Dr J M West
Chairman
6 March 2003
The consistency of performance across the Group, with significantly improved margins, reflects the strength of our business model and the ability of our management to adapt to changing market conditions.
Within Foundation Services, the US had a record year, whilst Continental Europe & Overseas produced another excellent performance. The UK and Australian foundation businesses both returned results that were much improved on the previous year. Within Specialist Services, Makers started to see returns from its investment in systems and processes, whilst Suncoast had a satisfactory first full year of ownership by the Group.
Acquisitions
2002 was an active year for acquisitions reflecting good opportunities which became available to us and which were consistent with our strategy.
In December 2002, in Foundation Services we acquired both a 51% interest in the new Spanish subsidiary, Keller-Terra, for £8.6m, and McKinney Drilling in the US for an initial consideration of £17.1m, together with the acquisition of Vibropile, announced at the half year, for £1.0m. In Specialist Services, we added Wannenwetsch in Germany and Accrete in the UK for a combined investment of £6.8m. We are encouraged by both the strategic benefit and the initial performance of these businesses as part of the Keller Group and we have made good progress in terms of their integration. As the acquisitions of Keller-Terra and McKinney were not completed until the end of 2002, there is no contribution from them in these results.
Financing
We completed two share issues during the year: 3.0m new shares were issued on 9 December 2002 as consideration for our 51% share in Keller-Terra and on 20 December 2002 we raised approximately £5.1m through a placing of 2.2m shares to part finance the acquisition of McKinney. With EBITDA interest cover remaining strong at 11 times, the board is of the view that the Group continues to be efficiently, but conservatively, financed.